Various financial centers with an orientation to guarding dynastic wealth have signed up to more tax information treaty sharing. Tax chasing governments have simply fuelled another accounting arms race.

Money is perhaps the most hyper-emotive, "uber-thorny"
issue of everyday life. Discussion is further impeded by the
economic incoherence of western politicians who have erroneously
preached a doctrine of milk and honey for all through odd
government wheezes, confiscation and sleights of hand. Any
taxation discussions are marked by delusional debates promoting
ever more tax from anybody who has risen above the mean. That is
not to dismiss welfarism - a decent society finds a means to
provide a safety net of support. Alas, things like welfare
spending ends up being organized by governments - who are
singularly ill-suited to handle any cash at all, and certainly
have little, if any role to play in generating wealth through
innovation.

Western governments have spent indiscriminately for 60 years and
the ‘blob’ needs more cash, (as prudent management
appears anathema to the public sector) leading to ever more
aggressive ways to steal your money. The problem remains that, despite the
political cant, high taxes simply don’t work. Even President
“Custard Pie” Hollande has somewhat realized this, as
France teeters on the brink of implosion. Remove the incentive to
earn more and people just don’t bother. Hence Britain kills
economic growth at both ends of the scale: aspiring earners reach
top rate tax so quickly it dissolves their motivation, while at
the bottom it can be much more cost effective to stay at home and
bleed the system through benefits. Meanwhile the vast bulk of
(heavily taxed) workers and unemployed are stuck somewhere in
between.

In a desperate quest for more cash to feed Jabba the Hutt-sized
government, offshore banking has come under repeated fire. Facts
are routinely ignored as economic illiterates led by President
Obama rail against the inequity of cash kept offshore beyond
national tax frontiers. A mistaken belief peddled by deranged
‘hopesters’ like Mr Obama remains that somebody else
will solve government’s chronic overspending. True, the
leprechauns / elves / gnomes of the private banking world have a
big pot of cash at the end of the offshore rainbow compared to
ordinary citizens but it is a droplet in the big government
ocean. Arch-taxer Democratic Senator Carl Levin notes that the
entire amount of tax being evaded by US citizens in offshore
accounts amounts to $100 million annually. The US government
borrows more every single hour, 24/7, 365 days a year!

Many economic illiterates make an elementary economic mistake.
Confusing the amount of tax liable (the tax due on interest
accrued) with the total account balance. Whatever way you look at
it, simply closing offshore banking only buys profligate
governments a few minutes more to indulge their spending follies.
(Unless you confiscate the cash of course, at which stage you
become an economic pariah akin to North Korea).

Which brings us neatly to ongoing tax arrangements between
various governments encompassing the west and many major
financial centers. With even Switzerland and Singapore signing up
to share data with American and other authorities, the mainstream
media is happily calling an end to the era of offshore banking.
As always, they are abjectly wrong. True the glamorous tales of
private bankers smuggling diamonds in toothpaste tubes may be a
Manhattan legend now, but private bankers will not die as a
result of high taxes - rather crackdowns provide new revenue
opportunities!

Higher taxation creates an economically nebulous
"rentier" class of advisors and accountants, whose job
is not to produce any wealth but merely to use the law to protect
those who don’t feel inclined to give their money back to
serially incompetent politicians. Raise taxes as France did and
capital spews across borders, closely followed by the wealth
creators themselves. Likewise, create more barriers to
individuals having offshore bank accounts and the rich will spend
more on specialist structures such as trusts. Finally, it ought
to be noted that America, in cocooning itself with all manner of
spurious laws to keep tax tabs on its citizens (FATCA et al)
across the world, has only served to further encourage
cooperation from Swiss and Singaporean bankers et al. They see
the economic shift, and thus are orienting their services to the
new world in the east where economic growth is key to improving
prosperity, not spending more of other people’s money on
unaffordable central government.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.